Sen. Mike Johnston unveils bill to revamp school finance in Colorado

Colorado's first major school finance bill in nearly 20 years would trigger new ways to calculate how state and local money pays for education and — if voters approve — add additional revenue for items like full-day kindergarten for all and preschool for at-risk kids.

Sen. Mike Johnston, D-Denver, unveiled a draft bill on Monday that he called a "once-in-a-generation chance to get this right" and build on 10 years of education reforms.

"To give life to the system we built, we must make sure we have the resources and financial incentives to do that," he said. "What you see laid out here is an attempt to build a financial system that matches the policy framework we've built."

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If passed, the complex, 144-page document would go into effect only if voters approve a statewide initiative to increase education funding — probably by anywhere from $750,000 to $1.1 billion annually.

Much of the bill deals with a new formula to determine state and local shares of education funding.

Johnston's plan would start by replacing a one-day, Oct. 1 student count with an average determined by data from four days throughout the year. Then districts would be allocated state dollars on what he says is a more equitable system based on a three-step model used in Rhode Island.

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First, the legislature would set an average state-local ratio — Johnston proposes a 64-36 split, Colorado's current ratio. Next, each district's property tax base per pupil would be adjusted to reflect the local median income and students on free and reduced lunch, a common measure of poverty.

Districts that lose funding as a result could increase local taxes to make up the difference or just absorb the loss.

The bill also would provide incentive for smaller districts to pass local tax increases by providing state matching funds — an enticement aimed at making a mill levy override a more attractive investment for voters.

If the bill were to pass, the Colorado Department of Education would begin calculating attendance data and new mill levies in 2014-15, and the revamped School Finance Act would go into full effect in the 2015-16 school year.

The numbers would be recalculated every five years.

"We want a formula that determines what a local district's ability to pay is, and then backfills the actual amount the state should provide," Johnston said.

The bill also includes extensive measures to ensure transparency in the way districts spend their money. Districts would be required to report all costs at the school level — encouraging state funds to follow students all the way to the classroom — while a new website would allow stakeholders to track spending and administrators to compare their costs with other districts and seek better deals from vendors.

Johnston's bill includes provisions to fund special education by a still undetermined amount and gifted and talented programs by an additional $5 million annually.

Recognizing the unfunded education reforms Colorado has instituted in recent years, the bill proposes a State Education Investment of $600 per student that districts could spend as they see fit. Additionally, an Innovation Fund, overseen by the CDE, would seek to expand learning time for underperforming districts.

But some educators noted that, even if the bill passes the legislature, a difficult challenge awaits in selling a statewide tax increase to the public — especially when not all districts will benefit equally from the revised school finance formula.

"I think we can make it make sense, but there has to be a really good, clear message," said Cindy Stevenson, superintendent of Jefferson County Public Schools. "If we want equal outcomes for all children in Colorado, we're going to have some unequal funding — that's what equity is about."

Johnston's bill grew out of an 18-month process involving a partnership of stakeholders that was overseen by the Colorado Children's Campaign, which sought consensus policy recommendations.

Johnston took the legislative lead and began crafting a bill and trying to muster political support. By tying the bill to voter approval of a tax increase for education that would benefit all districts, supporters hope to avoid the perception of large-scale winners and losers.

"I think the first draft of this bill is very much in line with what the School Finance Partnership focused on in its work over the last year," said Chris Watney, president and CEO of the Colorado Children's Campaign. "I'm sure there are going to be sticking points for some, but today is a really exciting day to see a bill so closely aligned to the work we've been doing."

Johnston said he will continue to solicit feedback on the draft bill and has posted resources on his web site to help stakeholders understand the complex legislation and offer their thoughts.

While the bill addresses some immediate concerns about school finance, it sidesteps the lingering issue of constitutional conflicts among the Taxpayer's Bill of Rights — TABOR — the Gallagher Amendment and Amendment 23. Those measures, which address taxes and school funding in different ways, could be considered in next year's session. But untying that legislative "knot" remains key to the long-term viability of any school finance reform.

The bill also will be introduced while the Colorado Supreme Court mulls an appeal of the so-called Lobato decision stemming from a lawsuit contending that the state's schools are underfunded by as much as $4 billion. Oral arguments in the case are scheduled for March 7.

"This has one of the best opportunities to be a success in years and years," said Scott Murphy, Littleton Public School's superintendent. "It's going to take everyone pulling together with focus on the right mission. There's never a perfect time to do this but if we don't say now is the time and we're the people to do it, who will?"

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